DBS Group Holdings
2002 Financial Results
Presentation to Media and Analysts
This presentation is available at www.dbs.com
February 21, 2003
2
DBS Group management team
Jackson Tai Vice Chairman and Chief Executive Officer,
DBSH and DBS Bank
Ng Kee Choe Vice Chairman, DBSH and Chief Risk Officer
Frank Wong Vice Chairman, DBS Bank and Chairman,
DBS Hong Kong
S Dhanabalan Chairman, DBS Group
Chong Kie Cheong MD & Joint Head, Investment Banking Group
David Lau MD & Head, Global Treasury and Markets Group
Oon Kum Loon Chief Financial Officer
Jeanette Wong Chief Administrative Officer
❑
Revenues, net profit up
❑
Continued improvement in mix, quality of revenues
❑
Expenses under control
❑
Regional operations contributing to overall
performance
❑
Asset quality steady
4
Net interest income 2,645 2,257 17.2
Fee and commission income 797 626 27.3
Non-interest income 1,421 1,275 11.4
Operating income 4,066 3,532 15.1
Staff costs 911 865 5.2
Other operating expenses 940 864 8.8
Operating expenses 1,851 1,729 7.0
Operating profit (a) 2,215 1,803 22.9
Goodwill amortization 278 133 108.6
Provisions 534 379 41.0
NPAM 1,017 997 1.9
Cash NPAM (b) 1,295 1,130 14.5
Revenues surpass S$4 billion, net profit up
(a) Operating profit before goodwill amortization and provisions (b) NPAM before goodwill amortization
(c) Figures have been restated to reflect the adoption of Statement of Accounting Standards 12 “Income Taxes”
(S$ million) 2002 2001(c) %
2002
2001
Comparison of
vs.
Cash ROA
0.86%
0.86%
Net interest margin
1.99%
1.87%
Cash ROE
9.21%
9.99%
Non-interest inc. / operating inc.
34.9%
36.1%
NPL ratio
6.1%
5.7%
Loan-to-deposit ratio
59.9%
63.9%
Cash EPS ($)
(b)0.87
0.89
Cost-to-income ratio
(a)45.5%
48.9%
6
Net interest income 642 671 (4.3) 707 (9.2)
Fee and commission income 191 201 (5.0) 207 (8.0)
Non-interest income 406 312 30.0 259 57.1
Operating income 1,048 983 6.6 966 8.5
Staff costs 226 219 2.7 232 (2.8)
Other operating expenses 245 233 5.9 284 (13.2)
Operating expenses 471 452 4.4 516 (8.5)
Operating profit (a) 577 531 8.5 450 28.0
Goodwill amortization 73 69 5.5 70 4.3
Provisions 181 150 20.4 87 108.2
NPAM 282 199 41.6 167 68.9
Cash NPAM (b) 355 268 32.3 237 49.8
Fourth quarter 2002 operating profit up 28%
(S$ million) 4Q 2002 3Q 2002 change% 4Q 2001 change %
Cash ROA
(b)0.95%
0.64%
Net interest margin
1.97%
2.11%
Cash ROE
(b)9.95%
7.56%
Non-interest inc. / operating inc.
38.7%
26.8%
NPL ratio
6.1%
5.7%
Loan-to-deposit ratio
59.9%
63.9%
Cash EPS ($)
(c)0.95
0.69
Cost-to-income ratio
(a)45.0%
53.4%
Fourth quarter 2002 financial ratios
4Q 2002
4Q 2001
8
❑
Revenues, net profit up
❑
Continued improvement in mix, quality of revenues
❑
Expenses under control
❑
Regional operations contributing to overall
performance
❑
Asset quality steady
707
663
671
642
670
1.97% 2.00%
1.96%
2.02% 2.11%
4Q01 1Q02 2Q02 3Q02 4Q02
2,645
2,257
2,039
2,035
1,430
1.99% 1.87%
2.02% 2.02%
1.77%
1998 1999 2000 2001 2002
YoY net interest income (S$ million)
Net interest margin (%)
Net interest income grew while interest margins
remained stable
QoQ net interest income (S$ million)
10
Non-interest income
streams steady
(%)
Non-interest income to Operating income
(a)39
1998 1999 2000 2001 2002 4Q
2001
(a) Includes extraordinary items:
2002 includes profits from the sale of NatSteel Ltd shares (S$96mn)
2001 includes S$212 million profit from sale of Insurance Corporation of Singapore, Keppel Capital Holdings and DBS Securities Building 1999 includes profits from sale of Singapore Petroleum Company shares (S$117mn) and DBS Tampines Centre (S$58mn)
Year on year
Trade and remittances
111
96
15.3
Deposit related
109
100
9.3
Credit card
95
69
38.2
Loan related
138
110
25.4
Investment banking
72
72
(0.2)
Stockbroking
126
73
73.2
Fund management
35
20
75.5
Wealth management
77
65
17.8
Others
34
21
62.5
Total 797
626
27.3
Fee-to-income ratio (%)
19.6
17.7
Fee income up 27%
12
Fourth quarter 2002 fee income slightly down
Trade and remittances
27
28
(2.2)
32
(15.3)
Deposit related
27
28
(3.4)
27
-Credit card
22
24
(9.3)
24
(6.7)
Loan related
39
41
(3.8)
32
24.3
Investment banking
22
19
18.2
18
19.4
Stockbroking
20
24
(18.4)
42
(53.0)
Fund management
9
5
87.1
6
40.2
Wealth management
13
20
(36.1)
21
(40.6)
Others
12
12
(3.1)
5
147.1
Total
191
201
(5.0)
207
(8.0)
Fee-to-income ratio (%)
18.2
20.4
21.4
Sales Volume of Investment Products
(Singapore and Hong Kong)
1,552
3,100
502 954 763 660 724
560
1998 1999 2000 2001 2002 4Q 2001 1Q 2002 2Q 2002 3Q 2002 4Q 2002
(S$ million)
Wealth management sales continue to grow
Singapore Hong Kong
2,006
4,496
681
1,152
995 1,219 1,129 880
14
Sales Volume of Bancassurance Products (Singapore)
1998 1999 2000 2001 2002 4Q 2001 1Q 2002 2Q 2002 3Q 2002 4Q 2002
Bancassurance sales in Singapore
(a) Sum of the annualized premiums of General insurance products, Life - regular premium products and Life - single premium products. Assumes that annualized premium equivalent of single premium products is 10% of the actual premium, in line with Life Insurance Association (Singapore) guidelines
General 7 14 2 3 4 4 4
Life - Single Premium 366 251 139 103 120 8 21
Life - Regular Premium 8 21 3 3 2 5 11
2001 2002 4Q 2001 1Q 2002 2Q 2002 3Q 2002 4Q 2002 (S$ million)
(S$ million) Weighted annualized
Other income marginally down
(S$ million)
2002 2001 change %Net gain on foreign exchange,
securities and derivatives
307
324
(5.3)
Singapore government
securities
103
80
28.5
Equities
100
(1)
nm
Disposal of investment
securities
18
130
(86.1)
Disposal of fixed assets
10
22
(54.4)
Others
25
31
(19.4)
16 Net gain on foreign exchange,
securities and derivatives 77 57 34.2 25 203.0
Singapore government
securities 17 39 (55.0) 2 764.7
Equities 98 (14) nm 18 442.7
Disposal of investment
securities (1) 7 nm (4) nm
Disposal of fixed assets 5 1 679.3 (3) 280.1
Others 7 5 41.9 6 21.5
Total 203 95 114.4 44 364.6
Fourth quarter 2002 other income up
4Q 2002 3Q 2002 change% 4Q 2001 change %
(S$ million)
Daily Distribution of Trading Income
Trading income (S$ million)
No
Interest rate FX
(S$ million) High Low
13.5
DEaR for Trading Book (Full year 2002) DBS Group DEaR for Trading Book
0
DEaR (S$ million)
N
Daily earnings at Risk and Trading Income
DBSH Group DEaR for Trading Book
18
1,543 1,830
824
2001
2002
(45%) (11%)
(19%) (15%)
Total Operating Income S$3,532 million
Total Operating Income S$4,066 million
(2%)
( ) Figures in parentheses refer to Group’s business segment as % of total operating income
(8%)
(44%) Consumer Banking
Treasury & Markets Funding Portfolio
Investment Banking Enterprise Banking Central Operations
Diversified income streams
❑
Revenues, net profit up
❑
Continued improvement in mix, quality of revenues
❑
Expenses under control
❑
Regional operations contributing to overall
performance
❑
Asset quality steady
20
Core expenses down 7%
DBSH (exclude Dao Heng &
DBS Vickers)
Staff costs
654
714
(8.4)
Occupancy expenses
156
166
(5.7)
Technology-related expenses
183
173
5.9
Others
(a)303
340
(10.7)
Sub-total
1,296
1,393
(7.0)
Dao Heng
371
205
80.6
DBS Vickers
162
91
78.8
Restructuring & integration costs
22
40
(44.8)
Total
(c)1,851
1,729
7.0
Cost-to-income ratio (%)
(c)45.5
48.9
(a) Includes advertising & administration expenses, consultancy fees, and revenue-related expenses such as brokerage commissions (b) Due to full year impact of consolidation of Dao Heng and DBS Vickers in 2002, as they were consolidated in June and September
2001 respectively
(c) Excludes goodwill amortization
(S$ million)
(b)
(b)
471
Fourth quarter 2002 expenses declined despite
one-time charges
Total operating
expenses
9%
Occupancy
expenses
15%
Staff costs
3%
4Q 2002 4Q 2001
(S$ million)
IT-related
expenses
12%
Others
(a)11%
22
❑
Revenues, net profit up
❑
Continued improvement in mix, quality of revenues
❑
Expenses under control
❑
Regional operations contributing to overall
performance
❑
Asset quality steady
Net interest income
622
321
Non-interest income
231
126
Operating income
853
446
Operating expenses
375
224
Operating profit
478
222
Provisions
185
22
Net profit after tax
272
208
Dao Heng operating profit up
24
Net interest income
826
826
0.1
Non-interest income
284
261
8.7
Operating income
1,110
1,087
2.1
Operating expenses
498
585
(14.9)
Operating profit
612
502
22.0
Provisions
(d)221
243
(9.2)
Net profit after tax
338
205
65.0
Combined Dao Heng and DBS Kwong On
performance
(S$ million)
(a) 2002 2001 change%(a) Based on Hong Kong GAAP, assumes exchange rate of HK$1 to S$0.223
(b) Under Singapore GAAP, S$34 million of foreign exchange loss on the sale of subsidiary is included in non-interest income. In our illustration above, the foreign exchange loss is included in net profit after tax and excluded from non-interest income
(c) Includes restructuring costs
(d) Includes impairment losses on fixed assets
(b)
2002
2001
Comparison of
vs.
Cost-to-income ratio
(a)44.9%
49.9%
Net interest margin
2.37%
2.33%
Loan-to-deposit ratio
74.0%
77.4%
Non-interest inc. / operating inc.
25.6%
24.0%
ROE
(b)8.1%
5.0%
ROA
(c)0.9%
0.5%
Fee-to-income ratio
17.9%
18.9%
2002 financial ratios for combined Dao Heng
and DBS Kwong On
26
180
342
270
356
2002 Target Achieved 2002
Achieved
synergies
HK$698 million
Targeted
synergies
HK$450 million
Synergies achieved; focus now on revenue
opportunities in Greater China
Key Revenue Initiatives:
◆ Launch of new funds
◆ ALCO Liquidity Management
◆ Cross-selling opportunities
(e.g.T&M, Private Banking, equipment finance and some existing Consumer Banking products) and credit card marketing management
Select Cost Initiatives:
◆ Active capacity management
largely through vacancies and attrition
◆ Branch network rationalization
as well as back office and IT centralization
(HK$ million) Revenues
Sales Volume of Investment Products
(Hong Kong)
(S$ million)
Wealth management sales continue to grow
Unit trusts / Treasury
investment products (a)
453
1,396
294 430
965
160
0 200 400 600 800 1000 1200 1400 1600 1800
28
DBS Thai Danu Bank continues to be profitable
(a) Based on Thai GAAP , assumes exchange rate of 1 baht to S$0.040 (b) Includes dividend income
(S$ million)
(a) 2002 2001 %change
Net interest income
(b)96.1
86.7
10.9
Fee and commission income
22.2
18.9
17.3
Other income
15.9
10.8
46.7
Non-interest income
38.1
29.8
28.0
Operating income
134.2
116.5
15.2
Operating expenses
89.9
83.0
8.3
Operating profit
44.3
33.5
32.3
Provisions
24.2
18.1
33.3
❑
Revenues, net profit up
❑
Continued improvement in mix, quality of revenues
❑
Expenses under control
❑
Regional operations contributing to overall
performance
❑
Asset quality steady
30
2,705 2,425
1,735 1,528 1,478 1,518 1,449 1,546
1,152
1,004 972 933 905
744 699
649
770 605
541
632 768
366
NPL quantum declines for the year
Dao Heng Bank
DBS Thai Danu Bank Regional 5 countries Others
Singapore
NBk NPLs / NBk loans (%)
(S$ million)
1,112
7,086
8,149
2,576
944 997
942 921
546 906
397 488 415 426
621
358 520
2,883
Percentage of doubtful and loss NPLs
Loss Doubtful Substandard
8,149
4,411 4,512
(61%)
(S$ million)
4,224
(22%)
32
NPLs of major subsidiaries
905
(a) Based on MAS guidelines
DBS Thai Danu
(a)DBS (HK) (a) 1.1% 1.0% 1.2% 1.2%
Industry (b) 1.9% 1.7% 1.3% 1.3%
Credit card charge-off rates
8.5%
11.6%
9.0%
11.2%
12.8%
10.2% 10.8%
13.3%
1Q02 2Q02
DBS HK Industry (b)
Credit card delinquency rates
DBS Hong Kong asset quality
DBS (HK) (a) 1.2% 0.8%
Industry (b) 1.1% 0.7%
12M 2002
3Q02 4Q02 90 days
past due
Residential mortgage delinquency rates
90 days
34
(S$ million)
Provision coverage
1,115
1,191
1,012 989
1,511
General Provisions (GP) Specific Provisions (SP)
2,286
2,719 2,633
4,286
3,147
2,533 2,721
SP+GP / Unsec NPLs 102.7 118.4 129.9 142.5 132.0 129.2 124.8 120.7
SP+GP / NPLs 44.4 52.6 51.8 60.3 60.4 60.4 61.0 59.2
Coverage ratios (%)
Non-loan provision charges up
2002
4Q 2002
Loans
397
332
121
112
141
Equities
61
25
18
47
(114)
Properties & other
117
89
36
-
70
assets
Specific provision
575
446
176
159
96
General provision
(41)
(67)
5
(9)
(10)
Total
534
379
181
150
87
3Q 2002 4Q 2001
2001
36
12.2
12.5
12.7
13.7
10.3
5.2
4.9
5.3
5.2
5.2
4 8 12 16 20 24
Dec 2001
Mar 2002
Jun 2002
Sep 2002
Dec 2002
Capital adequacy ratio
17.7
17.6
Tier 1 capital ratio (%) Tier 2 capital ratio (%)
15.5
19.0
Following final Dao Heng Bank payment, Tier 1 still
above requirement
Includes Dao Heng 2nd tranche
Maintaining dividend rate for shareholders
9
14
14
14
16
16
16
16
15
36%
33%
31%
22%
0
10
20
30
40
50
1999
2000
2001
2002
0
20
40
Interim dividends
Final dividends
Special dividends
Payout rate (%)
38
